Intends to sue David Drumm: Anglo Irish Bank
Anglo Irish Bank has said it intends to sue its former chief executive David Drumm for breaches of fiduciary duty arising from alleged misconduct and deception when he ran the bank.
It told bankruptcy hearings in the US last night that it would be bringing a case in relation to the treatment of loans the chairman Sean Fitzpatrick had from the bank which were taken off Anglo’s books every year and transferred temporarily to another bank.
The so-called warehousing involved as much as €100m being moved to Irish Nationwide Building Society and is already the subject of a Garda investigation in Ireland. The investigation is ongoing.
Warehousing personal loans meant shareholders were unaware of them. Earlier this year Sean Fitzpatrick said it was “wrong in hindsight”, but insisted he had done nothing illegal.
Anglo is seeking the repayment of loans from both Fitzpatrick and Drumm but both have declared themselves bankrupt.
Anglo is also alleging that Drumm created loan documentation in relation to a series of loan security letters for investors in Anglo shares three months after they were issued to making them ‘non-recourse’ loans, which would not have to be paid back of the bank collapsed.
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Earlier at the hearing, the bankruptcy trustee, Kathleen Dwyer, painted a chaotic picture of how Drumm managed his personal finances while he was running the bank, which was once the fastest growing in Ireland.
Dwyer said he and his wife Lorraine had between 20 and 25 bank accounts, the hearing was told.
“Can you explain to me why it is necessary to have so many accounts?” asked Dwyer.
Dwyer repeatedly asked why he and his wife had so many accounts and why he had no system for tracking them.
Asked why this was the case, Drumm said: “It was something we didn’t do.”
He admitted he knew the pin codes to his wife’s online banking accounts, and arranged some transfers of money in and out of them himself.
He said he kept so many bank accounts so he could avail of favourable interest rates on time-sensitive accounts such as deposits.
He said the other reason was to take advantage of a US law which guarantees accounts under $250,000 (€185,000).
“I think it’s quite common to make sure you get the benefit of protection,” Drumm said.
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